Idoport Pty Limited ACN 075 318 106 v National Australia Bank Limited - [2005] NSWSC 752

No judgment structure available for this case.

CITATION:
Idoport Pty Limited ACN 075 318 106 v National Australia Bank Limited & Anor [2005] NSWSC 752

HEARING DATE(S): 27 & 28 June 2005

JUDGMENT DATE :

28 July 2005

JURISDICTION:
Commercial List

JUDGMENT OF:
Bergin J

DECISION:
Summons dismissed

CATCHWORDS:
Application by defendants for dismissal of the Summons on the basis that the commencement of the proceedings was in breach of an order made dismissing previous proceedings - Whether the proceedings concern any cause of action or the whole or any part of any claim for relief in the earlier proceedings

LEGISLATION CITED:
Supreme Court Rules 1970 (NSW)

CASES CITED:
James M'Cabe v The Governor & Company of the Bank of Ireland (1889) 14 App Cas 413
Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors [2000] NSWSC 945
Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors [2001] NSWSC 744
Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors [2002] NSWSC 18
Martin v Earl Beauchamp (1883) 25 ChD 12
Minister of State for Immigration and Ethnic Affairs v Ah Hin Teoh (1995) 183 CLR 273
National Australia Bank Limited v Idoport Pty Limited [2004] NSWSC 212

PARTIES:
Idoport Pty Limited (Plaintiff)
National Australia Bank Limited (First Defendant)
National Market Group Limited (Second Defendant)

FILE NUMBER(S):
SC 50046/05

COUNSEL:
S D Robb QC / J D Harris SC / J H Stephenson (Plaintiff)
T F Bathurst QC / R A Dick (Defendants)

SOLICITORS:
Sarvaas Ciappara (Plaintiff)
Freehills (Defendant)

LOWER COURT JURISDICTION:

- 29 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

BERGIN J

28 JULY 2005

50046/05 IDOPORT PTY LIMITED ACN 075 318 106 V NATIONAL AUSTRALIA BANK LIMITED & ANOR

JUDGMENT

1 The plaintiff, Idoport Pty Ltd, commenced these proceedings by Summons filed on 1 April 2005 (the present proceedings). The claims made by the plaintiff are for “Performance Bonuses”, alleged to be owing to the plaintiff by the first defendant, National Australia Bank Limited (NAB), and the second defendant, National Markets Group Limited (NMG), pursuant to an Agreement dated 13 September 1996 (the Consulting Agreement).

2 These parties have been litigating against each other for years. The plaintiff’s claims in earlier proceedings against the defendants, for Performance Bonuses under the same Consulting Agreement, involving many issues identical to those raised in the present proceedings, were dismissed by Einstein J on 29 January 2002 for the plaintiff’s failure to pay security for the defendants’ costs.

3 This is an application brought by the defendants by Notice of Motion for an order that the Summons be set aside or dismissed, or alternatively an order that the proceedings be stayed.

The Consulting Agreement

4 The parties to the Consulting Agreement included the plaintiff and NAB. There are a number of clauses of the Consulting Agreement that are relevant to this application. Clause 1.1, Definitions and Interpretation, included the following:

Ausmaq Service

…

Group

…

Operating Entity

…

Performance Bonuses

…

Right

…

System IP Rights

5 Clause 7 provided as follows:

7. PERFORMANCE BONUSES

The Company will pay or procure the payment of periodic payments by way of performance bonuses as additional consideration for the Services of JMG on the following terms:

(a) The payments will be calculated by reference to the financial performance of each Operating Entity, and will be paid (in respect of an Operating Entity) by:

(i) the Company; or

(ii) by the Operating Entity itself if it is a Group member,

at the election of the Company.

(b) In the case of System, the Performance Bonuses will be paid by the Company and this Agreement constitutes the Company’s binding obligation to do so. In the case of each other Operating Entity, the Company will procure that the proposed Payer enter into a binding agreement to pay the Performance Bonuses in respect of that Operating Entity within 60 days of the relevant Operating Entity commencing business.

(c) The amount of the Performance Bonuses will be determined in accordance with Schedule 2.

(d) Performance Bonuses will be payable by each Payer:

(i) as to 75% of the total annual amount of the Performance Bonus payable as estimated by the Payer at that time, by the end of the financial year of the relevant Operating Entity; and

(ii) as to the balance of the Performance Bonus payable, based on the annual audited accounts of the relevant Operating Entity and within 120 days of the end of the financial year of the relevant Operating Entity.

(e) The Company will cause the Payer to deliver to JMG the Payer’s calculation of the Performance Bonus payable for the relevant financial year within 90 days of the end of the financial year of the relevant Operating Entity. JMG or an accountant appointed by it may review that calculation and will notify the Payer within 30 days of receipt of the calculation if JMG objects to the calculation. If no notice of objection is received from JMG within that 30 day period, JMG will be deemed to have approved the calculation.

(f) Any dispute regarding the amount of a Performance Bonus will constitute a Dispute. If such a dispute arises, the Payer will pay to JMG the amount payable in accordance with its calculations delivered under paragraph (e) pending the outcome of the dispute.

(g) Payments of the Performance Bonuses will be made net of any Tax directly arising from or applying to the relevant payment.

(h) On the Completion Date the Bank will provide the Guarantee in the form annexed to this Agreement.

(i) Where the calculation of a Performance Bonus requires adjustment under section 3 of the Schedule 2 but the amount of the Performance Bonus payable is insufficient to cover all adjustments, then it will be at the Company’s absolute discretion as to the order in which adjustments are made.

6 The orders sought by the plaintiff in the present proceedings include the following:

(“the NAB”)

(“Idoport”)

(“the Consulting Agreement”)

“Performance Bonuses”

(“Flexiplan”)

(“MLC Investments”)

(“MLC”)

(“MLC Nominees”)

(“MLC Holdings”)

(“National Wealth Management Services”)

(“NAFM”)

(“WMD”)

(“NMG”)

“Performance Bonuses”

3. Damages from NAB;

4. Damages from NMG;

Performance Bonuses”

“gross operating revenue”

“Performance Bonuses”

7 Section A, Nature of Dispute, of the Summons includes the following:

A.5 These proceedings concern a cause of action and part of a claim for relief by Idoport in previous proceedings no. 3991 of 2000. On 3 April 2004, Burchett AJ made a declaration that order 3 of the orders made by Einstein J on 29 January 2002 in each of proceedings no. 50113 of 1998, no. 50026 of 1999 and no. 3991 of 2000 had the effect, amongst other things, that Idoport cannot commence (including by filing originating process) fresh proceedings concerning any cause of action or the whole or any part of any claim for relief by it in proceedings no. 3991 of 2000 until it has paid the costs of proceedings no. 3991 of 2000 in full. Idoport has paid the costs of proceedings No. 3991 of 2000 in full.

8 In section B of the Summons the plaintiff claims that the issues likely to arise are:

Ausmaq Services”

Operating Entity”

Ausmaq Services”

Operating Entities

Performance Bonuses”

9 There is a claim that NAB established National Australia Financial Markets Group (NAFM) and that, as a subsidiary of NAB, it had the use of the System IP Rights. There is an allegation that since about 30 June 2000 NAFM, or business units within it, have undertaken investment platform system operation in respect of certain named services (C48-C50). Those allegations are as follows:

C.48 The NAB established NAFM.

C.49 Further and in the alternative, between about mid 2000 and late 2001 the NAB established NAFM.

C.50 NAFM is and was at all material times a subsidiary of the NAB and controlled and owned directly or indirectly by the NAB.

C51 NAFM has had the use of the System IP Rights:

(a) for the purpose of commercialisation of the MasterKey Custom (‘The Open System for Financial Diversity’) service, the MasterKey Custom Investment service, the MasterKey Custom Self Managed Super service, the MasterKey Custom Superannuation service and other MasterKey Custom portfolio services since on or about 30 June 2000;

(b) for the purpose of commercialisation of the MasterKey (‘The Open System for Financial Diversity’) Service, the Universal Super Scheme, the MLC MasterKey Unit Trust, the MLC MasterKey Cash Management Trust, MLC MasterKey Superannuation, MLC MasterKey Business Super, MLC MasterKey Allocated Pension, MLC MasterKey Term Allocated Pension, MLC MasterKey Annuity, the service of providing the MasterKey Protection Portfolio and other MasterKey portfolio services since on or about 30 June 2000; and

(c) for the purpose of commercialisation of the MLC MasterKey Investment Service, other than National Margin Lending, in the period since in or about February/March 2005.

Particulars

(i) Since on or about 30 June 2000, NAFM has held, administered and consolidated revenue in respect of various entities within the National Australia Bank Group of Companies including Flexiplan, MLC Investments, MLC, MLC Nominees, MLC Holdings and WMD.

(ii) Since on or about 30 June 2000, NAFM or business units within NAFM have undertaken investment platform system operation, product development, promotion, management, administration, sales and/or revenue collection services in respect of the MasterKey Custom (‘The Open System for Financial Diversity’) service, the MasterKey Custom Investment service, the MasterKey Custom Self Managed Super service, the MasterKey Custom Superannuation service and other MasterKey Custom portfolio services.

(iii) Since on or about 30 June 2000, NAFM or business units within NAFM have undertaken investment platform system operation, product development, promotion, management, administration, sales and/or revenue collection services in respect of the MasterKey (‘The Open System for Financial Diversity’) Service, the Universal Super Scheme, the MLC MasterKey Unit Trust, the MLC MasterKey Cash Management Trust, MLC MasterKey Superannuation, MLC MasterKey Business Super, MLC MasterKey Allocated Pension, MLC MasterKey Term Allocated Pension, MLC MasterKey Annuity, the service of providing the Masterkey Protection Portfolio and other MasterKey portfolio services.

(iv) Since in or about February/March 2005, NAFM or business units within NAFM have undertaken investment platform system operation, product development, promotion, management, administration, sales and/or revenue collection services in respect of the MLC MasterKey Investment Service, other than National Margin Lending.

(v) Idoport makes no claim for relief and brings no cause of action concerning National Margin Lending.

10 The following claim is made in C 64:

C.64 NAFM is and was at all material times within the definition of Operating Entity in clause 1.1 of the Consulting Agreement.

11 There are claims that NMG has failed to pay the plaintiff Performance Bonuses, in breach of the Consulting Agreement, in respect of sales revenue of various entities, including NAFM (C67). There are also claims that NMG has failed to enter, or procure the operating entity to enter, into a binding agreement with the plaintiff to pay the Performance Bonuses in respect of the revenue, including in respect of NAFM (C68).

The Motion

12 The defendants, by Notice of Motion filed on 22 April 2005, seek an order pursuant to Part 11 rule 8 of the Supreme Court Rules 1970 (the Rules) and/or the inherent jurisdiction of the court, setting aside the Summons. There is an alternative order sought pursuant to Part 13 rule 5 of the Rules and/or the inherent jurisdiction, that the proceedings be dismissed. Alternatively, an order is sought pursuant to Part 13 rule 5 and/or Part 40 rule 8 of the Rules and/or the inherent jurisdiction, staying the present proceedings until the plaintiff pays the defendants’ costs of Equity Division Supreme Court Proceedings no. 50113 of 1998 and no. 50026 of 1999 (the Main Proceedings).

13 It was submitted that the Court has inherent jurisdiction to prevent a defendant being vexed and oppressed with a subsequent set of proceedings duplicating causes of action raised in earlier dismissed proceedings, when the costs of the earlier proceedings have not been paid. In Martin v EarlBeauchamp (1883) 25 Ch D 12 Cotton LJ, with whom Lindley LJ agreed said at 15:

The rule is established that where a plaintiff having failed in one action commences a second action for the same matter, the second action must be stayed until the costs of the first action have been paid.

14 Similarly in James M’Cabe v The Governor & Company of the Bank of Ireland (1889) 14 App Cas 413 Lord Herschell, with whom Lord FitzGerald and Lord MacNaughten concurred, said at 415:

Martin v Earl Beauchamp

Background to the Orders for Dismissal

15 The hearing of the Main Proceedings commenced before Einstein J on 24 July 2000. On 19 September 2000, the plaintiff commenced what have been referred to as the “MLC Proceedings”, no. 3991 of 2000.

16 The Main proceedings sought from the defendants (allegedly pursuant to the Consulting Agreement) the payment of Performance Bonuses in respect of the revenue of certain “operating entitles” that were identified in the pleading. The MLC proceedings sought from the defendants (allegedly pursuant to the Consulting Agreement) the payment of Performance Bonuses in respect of the revenue of additional “operating entities” named in the pleading, which had become part of the subsidiaries of the defendants after the commencement of the Main Proceedings.

17 On 5 October 2000 Einstein J ordered that the MLC Proceedings be heard and determined with the Main Proceedings and that evidence in one be evidence in the other: Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors [2000] NSWSC 945. Einstein J’s judgment included the following:

11 On the defendants submissions, the only material difference between the claims made in respect of the first identified projects and the new projects is that in the new proceedings, comparison is made with a service with equivalent or similar functionality to the service of providing an automated securities trading system as it is or should be or should have been enhanced or modified or added to. Although the defendants assert that this matter was not pleaded in the third further amended statement of claim in the existing proceedings, the plaintiffs assert that this matter was so pleaded or particularised. The reach of the existing pleadings is likely to require determination in coming weeks. In any event, it is common ground that this interpretation of the definition of Ausmaq Service in clause 1.1 of the Consulting Agreement was put by the plaintiffs as a matter which they seek to litigate, in the course of their opening. [MFI P70]

12 It is also common ground that a number of other allegations in the statement of claim in the new proceedings are identical or substantially identical to the allegations made in the third further amended statement of claim in the existing proceedings. Examples include the following:

(a) the allegations concerning the obligations imposed on NAB /NMG by the terms of the Consulting Agreement are substantially identical, including the allegations as to the implied terms in the Consulting Agreement

…

Similarity of Evidence

…

18 Clearly during the course of the plaintiffs opening, Mr Garnsey QC made reference to possible evidence in relation to other services being developed by the NAB and to e-commerce services and the plaintiffs arguments on equivalent and similar functionality. On 31 August 2000 and on 4 September 2000 the court made enquiry of Mr Garnsey as to the ambit of the plaintiffs' equivalent and similar functionality' case. Mr Garnsey indicated in response that while the scope of the plaintiffs case was at that stage limited to the first identified four Bank projects, the plaintiffs were considering their position in relation to additional, 'recently added' services.

19 The proposition that it is appropriate for the existing proceedings and the new proceedings to be heard together cannot be gainsaid. The two sets of proceedings clearly cry out to be heard together. Simply standing back and examining the scale of the existing proceedings makes the point.

18 The Main Proceedings and the MLC Proceedings continued throughout 2000 and 2001.

19 In late August 2001 and early September 2001 Einstein J heard Notices of Motion brought by the defendants for security for costs. On 13 September 2001 Einstein J delivered his judgment in relation to the defendants’ security for costs application holding that the plaintiffs were liable to provide security for the defendants’ costs of the Main Proceedings and the MLC Proceedings: Idoport v NAB & Ors [2001] NSWSC 744.

20 On 24 September 2001 Einstein J made formal orders requiring the plaintiff, and the other plaintiff in the Main Proceeding, Market Holdings Pty Ltd, a company associated with the plaintiff, to provide security for costs. Neither of the plaintiffs sought to appeal from Einstein J’s security for costs judgment and orders. On 1 November 2001 the plaintiff failed to pay the first instalment of the security for costs of the MLC proceedings and those proceedings were stayed. On 29 January 2002 Idoport’s claims in the Main Proceedings and the MLC Proceedings were dismissed by reason of plaintiff’s failure to provide security for the defendants’ costs of those proceedings: Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors [2002] NSWSC 18.

21 The orders entered on 29 January 2002 in proceedings 50113 of 1998 were as follows:

THE COURT ORDERS:

1. That the Plaintiff’s Amended Summons and Fourth Further Statement of Claim, and the Second Cross-Claim, be dismissed.

2. That the Plaintiff pays costs of the proceedings.

3. That the Plaintiff and each of the Cross-Claimants to the Second Cross-Claim be barred from bringing fresh proceedings concerning any cause of action or the whole or any part of any claim for relief by any of them in these proceedings, until costs in these proceedings have been paid in full.

THE COURT NOTES that the First and Second Defendants undertake, subject to any application under Part 32A, or any successful appeal against the dismissal of the proceedings, or any application by any part for dismissal for want of prosecution, not to prosecute the Cross-Claim unless fresh proceedings are brought concerning any cause of action or the whole or any part of any claim for relief by any of them in these proceedings.

22 The orders entered on 29 July 20002 in proceedings no. 50026 of 1999 were as follows:

THE COURT ORDERS:

1. That the proceedings be dismissed.

2. That the Plaintiff pay the Defendant’s costs of the proceedings.

3. That the Plaintiff be barred from bringing fresh proceedings concerning any cause of action or the whole or any part of any claim for relief by it in these proceedings, until costs in these proceedings have been paid in full.

23 The orders entered on 29 January 2002 in proceedings 3991 of 2000 were as follows:

THE COURT ORDERS that:

1. NSW Supreme Court Proceedings No. 3991 of 2000 be dismissed.

2. The Plaintiff pay the Defendant’s costs of the proceedings.

3. The Plaintiff be barred from bringing fresh proceedings concerning any cause of action or the whole or any part of any claim for relief by it in these proceedings, until costs in these proceedings have been paid in full.

24 The defendants are making application in the Main Proceedings for a gross sum costs order of $63,110,109.56 in full satisfaction of the costs orders made by Einstein J on 29 January 2002. That application is pending before Einstein J. The defendants to the MLC Proceedings filed an Application for Assessment and Bill of Costs in this Court in respect of the MLC Proceedings, and a Certification of Determination of Costs was issued in favour of the defendants on 31 July 2003. On 25 August 2003 Idoport filed an application for review of that costs assessment and on 28 September 2004 the Costs Review Panel set aside the costs determination in respect of the MLC Proceedings and awarded $333,147.30 to the defendants in the MLC Proceedings. The plaintiff paid the amount awarded by the Costs Review Panel together with interest on 1 April 2005.

25 In 2004 the defendants apprehended that the plaintiff was intending to litigate the issues the subject of the Main Proceedings in a foreign country. NAB sought an anti-suit injunction. Ultimately, for reasons that I do not need to go into, that application was not pursued. However, Burchett AJ gave leave to NAB to seek a declaration in those proceedings in the following terms:

A declaration that Order 3 of the Orders made by Justice Einstein on 29 January 2002 (the ‘Orders’) in each of Proceedings 50113 of 1998, 50026 of 1999 and 3991 of 2000 (the ‘Proceedings’) has the effect that fresh proceedings covered by the terms of the Orders cannot be commenced (including by filing originating process) until Idoport has paid the costs of the Proceedings in full.

26 In those proceedings, National Australia Bank Limited v Idoport Pty Limited [2004] NSWSC 212, Burchett AJ said:

24. I have reached the conclusion that, whatever difficulties may have been seen to attend the form of the order, the Court of Appeal, in the absence of an appropriate ground of appeal, and in the absence of any reliance on the particular difficulty now taken up, dismissed the appeal, not only without varying the order, but also without making anything in the nature of a declaration as to its true construction. In this situation, I must construe it in accordance with its language. I think its language is correctly reflected in the declaration which is sought and, as this view of the meaning of the order is contested by Idoport, it is appropriate I should make a declaration accordingly.

27 Notwithstanding what Burchett AJ said in paragraph 24 of his judgment, the following orders were entered in those proceedings on 22 April 2004:

THE COURT:

1. Declares that Order 3 of the orders made by Justice Einstein on 29 January 2002 (the “Orders”) in each of Proceedings 50113 of 1998, 50026 of 1999 and 3991 of 2000 (the “Proceedings”) has the following effect:

(a) Idoport Pty Limited and the Cross Claimants to the Second Cross Claim cannot commence (including by filing originating process) fresh proceedings concerning any cause of action or the whole or any part of any claim for relief by any of them in Proceedings 50113 of 1998 until Idoport Pty Limited has paid the costs of Proceedings 50113 of 1998 in full;

(b) Idoport Pty Limited cannot commence (including by filing originating process) fresh proceedings concerning any cause of action or the whole or any part of any claim for relief by it in Proceedings 50026 of 1999 until it has paid the costs of Proceedings 50026 of 1999 in full;

(c) Idoport Pty Limited cannot commence (including by filing originating process) fresh proceedings concerning any cause of action or the whole or any part of any claim for relief by it in Proceedings 3991 of 2000 until it is has paid the costs of Proceedings 3991 of 2000 in full.

2. Orders that the Defendants pay the Plaintiffs’ costs of the Proceedings.

3. Orders that the Summons be otherwise dismissed and the interlocutory injunction granted on 10 July 2002, as amended on 12 September 2003, be dissolved.

The real issue

28 The defendants claim that the orders made by Einstein J in the Main Proceedings in January 2002 bar the bringing of the present proceedings. It is submitted that the present proceedings concern a cause of action brought in the Main Proceedings, namely a claim for Performance Bonuses under the Consulting Agreement and the general declaratory and injunctive relief sought to ensure payment of the Performance Bonuses. The real issue is whether the claims in the present proceedings “concern” the claims that fell to be determined and the relief sought in the Main Proceedings.

29 The plaintiff submitted that it has paid the costs of the MLC proceedings, as ordered, and that it is entitled to bring the present proceedings because they involve claims for Performance Bonuses on revenue of “operating entities” not previously identified or the subject of the Main Proceedings.

Consideration

30 The Main Proceedings brought by the present plaintiff and Market Holdings Pty Limited, its associated company, against the present defendants and certain other companies, made two sets of interrelated claims. The first set of claims included allegations that there had been a failure to commercialise the System, the subject of the Consulting Agreement, pleaded in a variety of ways, including breach of contract, breaches of fiduciary duties or obligations, and contraventions of the Trade Practices Act, 1974, all of which were alleged to lead to a claim for damages in the amount of approximately $29 billion. The second set of claims was for payment for Performance Bonuses. It was alleged that certain of the Bank’s wealth management services had “similar and equivalent functionality” to the System and that the plaintiff was entitled to Performance Bonuses pursuant to clause 7 of the Consulting Agreement.

31 Both the Main Proceedings and the MLC Proceedings called for the construction of the same terms of the Consulting Agreement. The present proceedings call for the construction of those same terms. Both the Main Proceedings and the MLC Proceedings sought payment of Performance Bonuses. The present proceedings seek payment of Performance Bonuses. Both the Main Proceedings and the MLC Proceedings involved an issue of whether or not systems developed without the use of the Ausmaq rights, were systems of similar and equivalent functionality. The present proceedings involve the same issue. Both the Main Proceedings and the MLC Proceedings would have required the court to determine precisely what the Ausmaq system was. The present proceedings require such determination.

32 In the Main proceedings, the Fourth Further Amended Statement of Claim (ASC), dated 24 October 2001, and 232 pages in length, concluded with the statement that the plaintiffs claimed the relief sought in the Amended Summons filed in the proceedings. The Amended Summons filed in the Main Proceedings included claims for the following relief (emphasis added):

5A. An order that each of the Defendants be restrained from, by himself or itself, or its or their servants and agents:

…

or any other service within the definition of the Ausmaq Service (as defined in the Consulting Agreement) or the System IP Rights (as defined in the Consulting Agreement)

or by way of an Operating Entity as defined in the Consulting Agreement;

or any other service within the definition of the Ausmaq Service (as defined in the Consulting Agreement or the System IP Rights (as defined in the Consulting Agreement)

or by way of an Operating Entity as defined in the Consulting Agreement.

…

and otherwise

…

14.3A NMG is and will continue to be bound to account for and to pay to JMG Performance Bonuses in respect of each of:

(H) Each other Operating Entity as defined in the Consulting Agreement

and otherwise

33 There was a similar claim to paragraph 14.3A made in respect of paragraphs 14 and 28-49N of the Third Amended Statement of Claim. The Amended Summons also included the following (emphasis added):

and otherwise

34 The ASC included the Claims referred to above in the Amended Summons, but also included a claim for the following relief (emphasis added):

way of an Operating Entity as defined in the Consulting Agreement and in connection with the Consulting Agreement.

35 The ASC pleaded and relied upon the same terms of the Consulting Agreement that are relied upon in the present proceedings. There is a general claim in paragraph 50.13 of the ASC that since on or about August-September 1997, the defendants have failed to account for and pay the Performance Bonus in accordance with the Consulting Agreement. The pleading also includes claims in respect of NAFM commencing at paragraph 54AA. It is alleged that NMG failed to obtain the listing of NAFM financial products on the Ausmaq Service (54 AJ) and that NAB and NAFM failed and refused to reach agreement with the NMG and Ausmaq Systems to cause and procure the listing of NAFM Financial Products on the Ausmaq Service (54AK). It also included the following claim:

54CP Between from about July 1998 and/or January 1999 to date as more specifically pleaded in paragraph 29 to 49H above, NAB by itself and by NAFM as the case may be has developed, promoted, operated, marketed and exploited as the case may be the NAB Services or some of them throughout Australia.

36 The ASC also alleged that NAB conducted its business so as to effect prejudicially or diminish the value of the Performance Bonus or other rights of JMG under the Consulting Agreement so as to render the Performance Bonuses or other rights substantially worthless (54CT(v)). There are various allegations under the heading “Wrongful Conduct of NAFM” in paragraphs 54DN.1 to 54DN.8.

37 Paragraph A.5 of the Summons in the present proceedings suggests, by implication, that there are no claims made in the present proceedings that concern a cause of action or claim for relief in the Main Proceedings. The claim is made that the present proceedings concern a cause of action and part of a claim for relief in the MLC Proceedings. It seems to me that the claim is made to suggest to the reader of the Summons that the only claims made in the present proceedings are claims that are completely new, except for those previously included in the MLC Proceedings.

38 The plaintiff claims that paragraph A.5 of the Summons reflects the true position and, having regard to the fact that it is paid the costs in the MLC Proceedings, it is free to litigate these new claims and those that were included in the MLC Proceedings. The plaintiff submitted that the fact that the MLC Proceedings were heard together with the Main Proceedings does not affect its claim that it is free to litigate these new claims. However there is no issue that if that statement in paragraph A.5 does not reflect the true position, and the present proceedings concern a cause of action or the whole or part of any relief claimed in the Main Proceedings, the plaintiff is not free to bring the present proceedings, having regard to Order 3 of the Orders in the Main Proceedings, made by Einstein J on 29 January 2002.

39 For the purposes of considering whether the present proceedings concern a cause of action, or the whole or any part of the relief claimed in the Main Proceedings, I will assume in the plaintiff's favour that the order that the MLC Proceedings be heard together with the Main proceedings, does not affect the claim that the plaintiff would be otherwise free to continue the present proceedings. However, the fact that the MLC Proceedings (involving claims in respect of operating entities additional to those in the Main Proceedings) were commenced as separate proceedings, rather than included in the Main Proceedings by amendment to the pleadings, is not determinative of the real issue for decision in this Motion.

40 The order made on 29 January 2002 barred the plaintiff from bringing fresh proceedings “concerning” any cause of action or the whole or any part of any claim for relief by any of them in these proceedings, until costs in these proceedings have been paid in full. The term “concerning” in the context of that order means “regarding, touching, in reference or relation to; about”, and in my view should be read broadly: Minister for Immigration and Ethnic Affairs v Ah Hin Teoh (1995) 183 CLR 273, at 289 per Mason CJ & Deane J.

41 It is clear that there were claims in the Main Proceedings in respect of NAFM’s conduct. To the extent that paragraph A.5 of the Summons in the present proceedings suggests, by implication, that the present proceedings do not concern a cause of action brought, or relief claimed, in the Main Proceedings, the claims in respect of NAFM demonstrate the lack of foundation for such suggestion.

42 However the defendants submitted that there is a far more fundamental problem with the implied suggestion in paragraph A.5 of the Summons in the present proceedings. They submitted that the relief claimed in the paragraphs in the Amended Summons and the ASC of the Main Proceedings referred to above, picks up every service and every operating entity, whether expressly referred to by name or not. If they fall within the definition of “operating entity “ as claimed, they were included in the claims in the Main Proceedings. It is submitted therefore that the claims made in the Main Proceedings cover the entities and services the subject of the present proceedings and it is clear that the present proceedings concern a claim for relief made in the Main Proceedings.

43 That construction of the claims in the Main Proceedings relies in part on the use of the term “and otherwise” highlighted in the extracted portions of the pleadings. Mr Robb QC, for the plaintiff in the present proceedings, submitted that those words in the pleading were rather infelicitous but, with his usual candour, accepted that if I were to find that they were intended to be a catch all, so as to broaden the Main Proceedings to include the operating entities that were not expressly named, then the plaintiff was clearly “in trouble” on this application (tr 60).

44 In my view paragraph 12.3 of the Amended Summons in the Main Proceedings sought an injunction against NAB to pay to the plaintiff the Performance Bonuses in respect of three categories of entities. The first was for the specifically named entities, NAB, NMG AUSMAQ Systems, and AUSMAQ NZ. The second category was “all other operating entities as defined in the Consulting Agreement for Australia and throughout the world as pleaded in paragraphs 14 and 28 to 50” of the then relevant pleading. The third category was that covered by the words “and otherwise”.

45 I am of the view that the words, “and otherwise”, in their context in paragraph 12.3 of the Amended Summons in the Main Proceedings, extracted earlier in this judgment, mean “all other operating entities as defined in the Consulting Agreement for Australia and throughout the world” otherwise than as pleaded, or in addition to those pleaded, in paragraphs 14 and 28 to 50 of the then relevant pleading. I am satisfied that those words in this context do not mean as pleaded elsewhere in the relevant pleading. If that had been intended there was no need to identify in the prayer for relief any paragraphs in the relevant pleading. All that would have been needed in that instance was a claim for Performance Bonuses in respect of “all other operating entities as defined in the Consulting Agreement for Australia and throughout the world” as pleaded in the then relevant pleading.

46 The words “and otherwise” appear in the same context in the relief sought in paragraph 14.8 of the Amended Summons extracted earlier in this judgment. I am satisfied the same meaning applies. In both paragraphs 12.3 and 14.8 the word “and” immediately after the word “otherwise”, makes the break between the concept of other entities and the concept of the calculation.

47 The terms of paragraph of 14.3A of the Amened Summons are different. The words “and calculated” are not included in that paragraph. Having regard to what was said in the plaintiff’s opening in the Main Proceedings before Einstein J, referred to below, it is highly probable that the words “and calculated” were left out of clause 14.3A in error.

48 This construction of paragraphs 12.3 and 14.8 of the Amended Summons in the Main Proceedings is, in my view, supported by the broad terms of the claims for relief, as emboldened, in paragraphs 5A (b) and 5A (c) of the Amended Summons, extracted earlier in this judgment.

49 The defendants submitted that such construction is also supported by the way in which the plaintiff’s then Senior Counsel opened the case. The transcript of the opening by Mr JJ Garnsey QC for the plaintiff, on 24 July 2000 includes the following (tr 16) (emphasis added):

Your Honour, an independent and in a way parallel part of JMG’s case relates to the Bank’s own e-commerce services which the Bank established after it obtained the AUSMAQ Service and which JMG was able to include in these proceedings. These services are the Gateway All In One service, the Automated Margin Lending service, the FX Auto Dealing service and Operation First Choice.

…

and indeed all the e-commerce of the National Australia Bank, or substantially all, to be put into NMG, National Markets Group, and developed and exploited by National Markets Group and an appropriate performance bonus paid to JMG in respect of them.

…

JMG says this is a wide obligation because of the wide, actual and potential function of the AUSMAQ Service as it was in 1996 and, for that matter, as it is or should be now.

…

But the Bank is developing other services and the decision in these proceedings may well affect JMG’s entitlement in respect of performance bonuses in respect of those other services. There may be evidence in the case in due course about those other services.

50 A written Outline of the opening relating to issues in the pleadings was provided to Einstein J. That Outline stated that the definition of AUSMAQ Service in the Consulting Agreement “is ambulatory for the duration of the Consulting Agreement” and “catches any service with equivalent or similar functionality”. It was noted that the term “functionality” was not defined in the Consulting Agreement but that it “must be understood in the light of the AUSMAQ Service’s actual and potential functionality”.

51 In respect of “operating entity” the written outline stated as follows (emphasis added):

67. It is the Plaintiffs’ case:

(1) That NAB and any other entity whether a body corporate or otherwise, which is developing, exploiting, commercialising or marketing each of the four NAB services, is doing so in respect of services with equivalent or similar functionality to the AUSMAQ Service as defined in the Consulting Agreement.

…

Furthermore, the definitions of System IP Rights and AUSMAQ Service are inter-related and of ambulatory effect during the continuance of the Consulting Agreement

…

71. Consequently,

(1) “entity” as used in the definition of “Operating Entity” in clause 1.1 of the Consulting Agreement includes:

· all branches, divisions, sections of NAB or of the NAB Group, being entities established by NAB (using the System IP Rights for the time being), and hence NAB itself as a corporate entity acting by those unincorporated entities, and

· subsidiaries and related corporations of NAB being entities established by NAB (using the System IP Rights for the time being), and

· each of the bodies corporate or unincorporate as pleaded in paragraphs 29 to 49H of the Third Further Amended Statement of Claim being entities established by NAB (using the System IP Rights for the time being).

52 The plaintiff’s written Reply to the Defendants’ Opening in the Main Proceedings, handed to Einstein J on 15 December 2000 (after the MLC proceedings had been commenced and ordered to be heard with the Main Proceedings), included the following:

whether in existence on the Completion Date as defined (6 November 1996) or subsequently developed or provided by JMG. t

he Group or any other person.

53 The word “infelicitous”, in the context in which Mr Robb QC used it to describe the inclusion of the phrase “and otherwise” in the above paragraphs of the Amended Summons in the Main proceedings, means “inaptness of expression” or an “inappropriate” expression: The New Oxford Dictionary of English. It seems to me, the use of word is itself infelicitous. The words “and otherwise” were, in fact, felicitous for the broad nature of the claims made by the plaintiff in the Main Proceedings. Those words were not a slip or a drafter’s flourish. They were totally consistent with the very high and wide claims made in relation to systems “whether in existence” in 1996 or “subsequently developed” by NMG “or any other person” and operating entities whether named or not.

54 The Summons in the present proceedings makes claims in respect of operating entities that, except for NAFM, have not previously been expressly named in the Main Proceedings. That strategy, together with the payment of the costs assessed in the MLC Proceeding, may present as a rather ingenious way to have litigated the very issues that were the subject of the Main Proceedings, without having to pay any further costs of the Main Proceedings. I am satisfied that this plaintiff was, by its pleadings in the Main Proceedings and, by its Senior Counsel’s opening in the Main Proceedings, concerned to ensure, and did ensure, that the Main Proceedings would be determinative of the very issues raised for determination in these proceedings.

55 I am satisfied that the cause of action for the payment of Performance Bonuses in respect of the operating entities referred to in the present proceedings concerns a cause of action and part of the relief claimed in the Main Proceedings. I am satisfied that the present proceedings are an inappropriate device and offend against Order 3 made by Einstein J on 29 January 2002: that the plaintiff is barred from bringing fresh proceedings “concerning any cause of action” or “the whole or any part of any claim for relief” in the Main Proceedings, until costs of those proceedings have been paid in full. The present proceedings are an abuse of the process of the Court.

Orders

56 I am satisfied that the appropriate order in this case is that the Summons be dismissed. I order that the Summons filed on 1 April be dismissed. The plaintiff is to pay the costs of the proceedings up to an including today.

***********************

Citations

Idoport Pty Limited ACN 075 318 106 v National Australia Bank Limited [2005] NSWSC 752

Most Recent Citation

Cases Citing This Decision

5

Idoport Pty Ltd v National Australia Bank Ltd [2006] NSWCA 202

In the matter of Idoport Pty Limited (In Liq) [2011] NSWSC 322

National Australia Bank Ltd v Idoport Pty Ltd [2007] NSWSC 1349

Cases Cited

5

Statutory Material Cited

1

Idoport Pty Limited v National Australia Bank Limited and 8 Ors; Idoport Pty Ltd "JMG" and Market Holdings Pty Ltd v Donald Robert Argus [11] [2000] NSWSC 945

Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744

Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18

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CITATION:	Idoport Pty Limited ACN 075 318 106 v National Australia Bank Limited & Anor [2005] NSWSC 752
HEARING DATE(S):	27 & 28 June 2005
JUDGMENT DATE :	28 July 2005
JURISDICTION:	Commercial List
JUDGMENT OF:	Bergin J
DECISION:	Summons dismissed

CATCHWORDS:	Application by defendants for dismissal of the Summons on the basis that the commencement of the proceedings was in breach of an order made dismissing previous proceedings - Whether the proceedings concern any cause of action or the whole or any part of any claim for relief in the earlier proceedings
LEGISLATION CITED:	Supreme Court Rules 1970 (NSW)
CASES CITED:	James M'Cabe v The Governor & Company of the Bank of Ireland (1889) 14 App Cas 413 Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors [2000] NSWSC 945 Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors [2001] NSWSC 744 Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors [2002] NSWSC 18 Martin v Earl Beauchamp (1883) 25 ChD 12 Minister of State for Immigration and Ethnic Affairs v Ah Hin Teoh (1995) 183 CLR 273 National Australia Bank Limited v Idoport Pty Limited [2004] NSWSC 212
PARTIES:	Idoport Pty Limited (Plaintiff) National Australia Bank Limited (First Defendant) National Market Group Limited (Second Defendant)
FILE NUMBER(S):	SC 50046/05
COUNSEL:	S D Robb QC / J D Harris SC / J H Stephenson (Plaintiff) T F Bathurst QC / R A Dick (Defendants)
SOLICITORS:	Sarvaas Ciappara (Plaintiff) Freehills (Defendant)